Case Study Tyco 1

Topics: Dennis Kozlowski, Ethics, Business ethics Pages: 3 (1108 words) Published: April 29, 2015
Case Study: Tyco
It's not impossible to pay $2,200 for a wastebasket and $6,000 for a shower curtain,103 but when you claim them as company expenses, there will eventually be implications. This was precisely the situation that led to the misappropriation of $600 million that was allegedly stolen from Tyco and its shareholders,104 a multinational corporation dealing in industries from hospital suppliers to fire sprinklers.105 At the beginning of 2002, it was uncovered that the then-CEO Dennis Kozlowski and his associate, CFO Mark Swartz, were using the company's funds for inappropriate purposes. The official company stance on the scandal was reportedly, “Yes, they took the hundreds of millions—but the board let them do it.”106 In June 2005, Kozlowski and Swartz were convicted of conspiracy, fraud, and grand larceny107 and sentenced to up to 25 years in jail.108 Within the organization, morale was low. There was a sense of frustration among employees109 and when the new CEO, Ed Breen, stepped in to the top role at Tyco in July 2002,110 one of his major challenges was changing opinion of the corporation by communicating how the company was changing. The core business at Tyco was strong, so the focus of the change was never mediated by the possibility of bankruptcy.111 In this sense, Breen was fortunate, heading up a corporation with a strong operational and financial basis on which to rebuild the company after the tarnished reputation that Kozlowski left behind.112 THE WAY TO INTEGRITY AND A CULTURE OF ACCOUNTABILITY

In order to change the organization's practices, Breen initiated a turnaround team to modify unethical behavior.113 The first steps that were taken were symbolic gestures to show his determination to reinvent the company. Although he never openly commented on Kozlowski's past behavior, his immediate replacement of board members spoke louder than words.114 By the end of 2002, there had been a complete overhaul of the executive team, with every member...
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